Analyst Maynard Um of Wells Fargo released a “pictorial” view of all the data from Apple Inc. (NASDAQ:AAPL) 10-K/Qs. Firstly; Apple’s gross margin was helped out in the third quarter due to warranty accrual, which decreased by $497 million. Cost of claims also went down by $18 million, which management credits to “products that are the highest quality the company has ever made.” The analyst also expects “FQ4 to see a cyclical increase in accruals as the new iPhone 7 launches.”

Based on his analysis, Um also thinks that Apple’s accrued marketing and selling expenses went down in the third quarter because channel price protection to clear inventor goes into this line item.” Um feels that lower inventory going into the next quarter should help lower channel price protection “as product price cuts should not have an impact in the September quarter.”

Apple recently stated that by next year its Services will be the size of a Fortune 100 company. The analyst believes that growth is “in part driven by Apple’s leverage of its hardware installed base.” Um also recognizes that the December 2016 quarter has an extra week, which he doesn’t think is incorporated in estimates. Um thinks that an extra week could drive the sales of an additional 12 million units. Furthermore, he thinks this extra week “can support the theory of an earlier September launch of the iPhone 7 as Apple would not have to worry as much about pulling demand into September from December.”

The analyst maintained his Outperform rating with a valuation range of $115 to $125.

According to TipRanks, the analyst has a yearly average return of 13% and a 62% success rate. The analyst has a 18.6% average return when recommending AAPL, and is ranked #184 out of 4,071 analysts.

TipRanks shows that out of the 39 analysts who rated AAPL in the last 3 months, 85% gave a Buy rating, 10% gave a Hold rating and 5% gave a Sell rating. The average 12-month price target for the stock is $123.94, marking a 18.63% upside from current levels.